Rockville reaches settlement in parking garages lawsuit

Suit caused city to raise contract amounts for outside law firm

The city of Rockville reached a settlement in December with two companies that filed suit over construction costs for public parking garages in Town Square.

Debra Yerg Daniel, Rockville’s city attorney, said the city is pleased with the outcome of the settlement.

“They’re not paying us anything, and we’re not paying them anything,” she said.

Settling out of court saved the city the uncertainty of an appeals process that could have sent the case back to trial, Daniel said.

Rockville signed contracts with RD Rockville LLC and RD Rockville Garage LLC in 2004 to design and build three public parking garages with a total of about 1,800 parking spaces in Rockville Town Square.

The two corporations sued the city in 2011. They claimed that Rockville was required by contract to pay for parts of the garages — such as elevators, lighting and mechanical ventilation — but did not do so. RD Rockville sought $5.2 million and RD Rockville Garage sought $338,461, The Gazette reported in February.

The city filed a counter claim, saying the two corporations and their subcontractors made omissions or errors in designing and building the garages, costing Rockville about $145,000. The city also claimed that it spent $1.4 million for improvements that RD Rockville and other entities were required to pay for, but never did.

In May 2012, a jury said the corporations and their subsidiaries owed the city $496,478 for the added completion costs, but the city owed the subsidiaries $299,666 because plans to sell parking spaces with condos changed, The Gazette reported at the time. The corporations appealed the ruling, and Rockville filed a cross appeal, Daniel said.

“The jury found in favor of the city in certain claims and in favor of the plaintiff in certain claims,” Daniel said. “Now that we’ve entered in the settlement, we’re in the process of dismissing the appeals.”

To cope with the lawsuit, Rockville brought in outside legal counsel, raising the amount it spent on a contract with the law firm Venable LLP, which was founded in Baltimore and has offices in Rockville.

In September 2011, the city approved a $500,000 contract with Venable for fiscal year 2012, but the mayor and council agreed to double that amount in January 2012. In May, they increased the contract amount by $500,000 again for a total of $1.5 million, due in part to litigation over the parking garages. Other reasons for the added costs included transfering maintenance of Town Square to Federal Realty Investment Trust, finalizing agreements related to the opening of a grocery store and code enforcement, according to Mayor and Council documents.

In FY 2011, Rockville officials approved up to $430,000 to contract with the firm. In December 2012, the mayor and council approved spending up to $375,000 in the current fiscal year for legal services from Venable to work on the city’s debt service fund, pension plan assets and litigation over the Town Square parking garages.